There are more consumers on the verge of credit debt bankruptcy than ever before.
Coming off one of the worst economic recessions since the Great Depression many Americans are still experiencing financial hardship.
Even though bankruptcy might feel like the only option for some people it is important that you understand your debt relief options.
The first method to avoid credit debt bankruptcy is credit counseling.
Credit counseling programs are intended for consumers with several high interest credit account lines.
Instead of paying back all these high interest accounts separately, credit counseling programs negotiate and lower the interest rates on these accounts, combines all the balances, and comes up with an affordable payment to pay back the entire amount generally over a period of 4-9 years.
This payment will typically be the sum of all your minimum payments.
It's very important that you are able to make this payment on time throughout the course of the program because credit counseling programs are notoriously strict about clients missing payments and will typically kick you out after just a few missed payments.
But, if you are able to comfortably meet your minimum monthly payments then credit counseling can be a great way to pay back all your debt at a lower interest rate saving you thousands of dollars over the years.
If you are struggling to meet your monthly minimum payments then debt settlement can be a good option.
Debt settlement programs negotiate a reduction in the overall balance and legitimate programs can typically get 40-60% of your unsecured debt removed.
Creditors agree to these debt settlement deals because they know if you file bankruptcy they will receive nothing.
Therefore if they believe you are a legitimate candidate for bankruptcy they are more than willing to negotiate and settle for a lower amount.
50% of their money is better than nothing.